Barcelona is facing increasing pressure on its housing market, primarily in rental prices. The Mediterranean city, which last year became the third most popular European destination after Paris and London, is facing a new housing crisis.
Rents are being pushed up by lack of new housing stock, an increase in “sharing economy” rentals, and the city’s popularity, among other factors.
Barcelona is considered one of the best-designed cities in Europe, and a worldwide leader in the smart city movement. The popularity of the Catalan capital is drawing people from abroad, attracted by the quality of life, good public services and, until recently, cheap rents.
To understand better the situation, we sat down with Carme Trilla, president of the Habitat 3 foundation, a nonprofit that works with the city council to find and secure affordable housing for low-income families and residents with special needs. Trilla is considered one of the top experts in Catalunya, as she was previously secretary of housing in the Generalitat, the Catalan government.
Barcelona can’t meet the current housing demand because the city has no more available land for new developments, Trilla said. Since the 1980s the city has only increased its housing stock by about 3,000 to 4,000 units in total, when a city of 1.6 million needs about 20,000 units per year to meet the demand.
Trilla also pointed to Airbnb as one the main culprits. She said their influence on the rental market has been huge. While there is strict regulation of tourist rentals in Catalonia and Barcelona, the lack of cooperation by Airbnb and other platforms makes it complicated to ensure hosts comply, pay their taxes and don’t remove flats from the regular market to convert into illegal hostels. In some cases, the city has fined owners of apartments for running illegal Airbnb rentals when in fact it was their tenants who were running the business, breaking both the rules of their rental agreement and the city’s regulations.
On that front, Trilla would like legislation such as the one recently approved in San Francisco that makes the platform pay $1,000 per day for each listing that is not registered with the city. Airbnb has sued its hometown, claiming the new regulation is unfair because hosts need to register in person and do extensive paperwork to obtain a permit.
But Barcelona is applying pressure on Airbnb in its own way. Earlier this week the city council approved a plan to raise the maximum fine the city can levy against home rental platforms, such as Airbnb and Homeaway, for illegally listing tourist rentals, to € 600,000 ($660,000), a 20-fold hike. Airbnb, has around 18,600 listings in Barcelona, its third highest number in Europe. If the San Franciso rule were applied in Barcelona, the city would be fining Airbnb several million euros a day.
Last year, Barcelona elected a new mayor, Ada Colau, whose background is in grass-root movements against foreclosures. She promised to negotiate with the banks to stop people losing their homes and so far has made some advances. As the overall economy improves in Catalonia, however, the banks are starting to offer some risky mortgages again.
The problem is that, according to the Spanish law, when an owner defaults on their mortgage banks take not only the property as collateral but also can go after the personal assets of the creditor. That is why Trilla wants the law changed to force banks to accept the property as full payment, as it works in most European countries. That will force the banks to be more careful about giving new mortgages and will reduce speculation in the market, she argues.
Trilla confirmed that the city recently had to raise the ceiling for rents that could be subsidized for low-income families. The city pays landlords a substantial part of the rent over two years. If the overall rent increases continue, the city will probably have to end the program or introduce rent control, something she doesn’t think is a good idea.